Both U.S. Senators from Massachusetts and two members of the Bay State’s House delegation this week supported a compromise $801 billion tax package that will help employers by extending the federal research and development tax credit and a provision that would allow businesses to write off their investments in equipment.
Senators John Kerry and Scott Brown were joined by Representatives William Delahunt and Niki Tsongas in voting for the measure, which will extend for two years the Bush-era tax reductions and add 13 months of unemployment benefits. The remaining members of the Massachusetts Congressional delegation – Representatives Michael Capuano, Barney Frank, Stephen Lynch, Edward Markey, James McGovern, Richard Neal, John Olver and John Tierney – were opposed.
President Barack Obama, who developed the compromise package with Congressional Republicans, is expected to sign the bill as early as today.
Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts, noted that extension of the Bush tax cuts will provide additional capital to the many Massachusetts business owners who operate as subchapter-S corporations and pay the personal income tax rate.
“The president and Congress deserve tremendous credit for passing legislation that will stimulate job growth and advance the economic recovery here in Massachusetts,” Lord said.
The federal research and development tax credit is a complex incentive that can amount to 20 percent for companies that existed during the 1980s and ratchet down to 7 percent for companies founded later. The credit has been a sort of orphan among economic stimulus measures – it has never been made permanent, has lapsed four times and been renewed more than a dozen times.
Both the R&D credit and the expensing provisions benefit key sectors of the Massachusetts economy. Durable goods make up almost $24 billion of the $34 billion in gross domestic product generated by Massachusetts manufacturers, while a recent study by AIM and the University of Massachusetts underscored the importance of research and innovation in allowing Bay State defense contractors to triple the value of their business in the past 15 years.